Analytical perspectives on the Fédération Internationale de l'Automobile (FIA)

Rally Sardinia 2017 will be remembered as a week-end of emotions. Tänak’s first ever WRC win, Neuville’s whining, Latvala’s anger, and Meeke’s despair. These are just some of the ingredients in what turned out to be a great example of what a sport can offer if the playing field is levelled out. With the dominant Volkswagen team absent from the stages we now see the unfolding of a season where drivers and teams battle it out and generate excitement into the final meters of the rally.

For that reason, FIA should get some credit. The governing body of world motorsports has taken a lot of heat when it comes to regulations the past couple of years, but if some of these changes can be attributed to the championship standings today I think we should give them a break. Whether there are causal relations between rule changes and competitiveness is too early to tell, but the distribution of stage wins and event victories is a strong indicator of that it has had some impact.

In the bigger picture I believe it boils down to the fact that short-term changes does not always bring short-term effects as there are a lot of unpredictability factors in rallying. For example, a hypothesis that has been made is that whereas accidents with the old WRC cars happened because drivers went over the limit of the cars, today’s WRC cars are involved in accidents because they stress drivers to exceed their own limits. A paradoxical and fascinating consequence is that as the podium comes within reach for more drivers, they risk more even though the overall competition has toughened.

There is another reason why this week-end has been emotional. From this day this website will no longer be updated. Instead it will merge with a newly designed website that, when it is done and synched with a new research project I hope to embark on in 2018, focuses on the governance of FIA rather than the action of the WRC.

Later this year we will see a new FIA president enter the offices at 8 Place de la Concorde – or accept the fact that Jean Todt will continue his job. In a journal paper published in Palgrave Communications I have analysed team Todt’s past visions for the FIA 2009-2013 and 2013-2017, as well as those of his opponents (as long as there were some) in the two previous elections. The impression is not bad. Given this situation there are surely others than me who wonder what he will do next. Despite being interviewed across seven pages in the recent edition of AUTO, FIA’s in-house publication, not once is he asked about a third presidential term. Although this can probably be explained by the norm that prevents ruling presidents to campaign before the election race is on, as well as an effect of the reporter’s (F1 guru James Allen) mild questions, it is not against French law to reflect upon the future.

This kenopsia leaves us to speculate. What can be said about his eight years so far? For the WRC these years have been a true combination of highs and lows. It began badly with ‘the Antonov affair’. On 24 November, 2011, Russian banker Vladimir Antonov and his partner Raimondas Baranauskas were arrested in London on allegations of serious fraud. As Antonov’s financial empire trembled with further revelations of connections with the mafia, secret accounts and the withholding of information from the financial authorities, the WRC tottered with it because Antonov was the main backer of the multinational investment group, Convers Sports Initiatives (CSI), which, in turn, owned North One Sport (NOS), the company in charge of the global media production and promotion of the WRC 2010-20.

Days came and left before FIA took action and Antonov disappeared into the British legal system. Autosport informed its readers on 7 December that the FIA was now working on an ‘immediate plan’ to make sure the 2012 World Rally Championship went ahead, and that several companies were being considered for the promoter rights as an alternative to CSI, among them energy drink and lifestyle consortium Red Bull. Todt was also forced to return to FIA headquarters in Paris from his vacation in Bali with Hollywood actress wife Michelle Yeoh to deal with the matter personally. No real deal was made. Hence, the 2012 season went by through a series of ad hoc solutions, before Red Bull re-entered the ring for the 2013 season. From being in a state of emergency everybody now expected a major improvement in the promotion of the championship.

While some feared a Red Bullization of the WRC others accuse the Austrian brand giant for doing too little. The truth is perhaps somewhere in the middle, as the difference from previous promoters is quite small and those differences that exist (like the Power Stage, which by the way have been tried before) does not alter the essentials of the sport. In terms of grasping the spectator sensations of rallying, for example, I have argued in previous posts that a lot of work remains. Meanwhile, on the positive side, new regulations for 2017 saw the emergence of new manufacturers (save Volkswagen’s melodramatic exit), more powerful cars, and a new level of competition. In the AUTO interview Todt says that this it’s a pleasing development as he felt rally cars had lost some charisma. To rectify this, Todt explains, they – as in FIA – wanted to bring back the awe when people saw the Group B cars. At the same time he underlines that replicating the anarchic setup of events like the Safari rally is impossible for political and safety reasons.

This juggling with nostalgia and innovation – bringing back the best and leaving behind the worst – is the core logic of being able to balance ‘the pull’ of traditions with ‘the push’ of commercial considerations. In light of the recent discussions of expanding the WRC calendar to 16 events I think Todt should enter a third term, if he does not choose to stand down or is beaten by his opponents, with an aim to rejuvenate the calendar. With popular new cars on site and a promotional deal still in progress, the remaining issue with the WRC is the combination of rallies. There is no secret that I would prefer a mix of ‘classics’ and ‘newbies’ over a given period of time – say, three years. This would cement the status of the traditional events as well as give new events a chance to defend their place in the calendar. Both Todt and FIA rally director Jarmo Mahonen expressed last year a desire to expand the calendar geographically.

Should that be the case, subject to approval from the manufacturers, there is however another issue that Todt and the FIA has evaded for a very long time: politics. In Formula 1 there had to be riots and loss of lives before something was done (and later undone) about the absurd descision to host a Grand Prix in a country where human rights were trampled upon. In less dramatic cases, the same logic applies in Turkey, one of the countries mentioned by Mahonen. Headed by a political administration that since 2016 has reversed many of its liberal reforms, closed down media and higher education institutions, and firing civil servants for nothing it does not offer the best of circumstances for an event governed by an institution that promise to live by the aim of the Olympic Charter: ‘to place sport at the service of the harmonious development of humankind, with a view to promoting a peaceful society concerned with the preservation of human dignity’.

Source: Hamel Alrayeh/Wikipedia Commons

Traditionally, FIA has claimed neutrality in all cases where politics and sport have intersected. The question is what Todt and his team will do, if he continues, when there are no more neutral zones to be found, or when this neutrality reinforces what it is supposed to avoid: brute state suppression of political dissent.

Eventually, after an incredibly messy couple of weeks, we learned yesterday that the 2017 edition of the VW Polo will not be part of the WRC – ever! Despite several interessents such as Martin Prokop and Andreas Mikkelsen the other manufacturers put their foot down and refused to grant VW an exception from the homologation rules. From a manufacturer point of view this is logical: if you let them compete the fans will be happy, but few will take notice if you as a factory team beat a privateer. But if the privateer beats a factory car, both team and driver face the risk of becoming laughing stocks.

What I don’t get is the FIA’s distant attitude to this issue. Sporting rules are meant to ensure fair and open competition. As a global sporting body, with the responsibility to make the WRC a great championship, FIA therefore needs to commence regulations based on a compromise: keep standards high enough to make it worthwhile for manufacturers to invest their money, and level the playing field in order to secure a steady upstream of talent and teams. With the 2017 rules it seems like FIA has achieved the former, but at the expense of the latter. This strategy could have worked out well if WRC2 had seen a comparable influx of talent and if VW had stayed in the top league.

But when the other teams turned against FIA and voted down the possibility of a privately run VW team, regardless of reasons, it also exposed a flaw in the body’s stakeholder governance. First FIA claim the right to make and enforce the rules. Then they leave it to the manufacturers to decide whether another manufacturer should get a waiver. Because this situation will probably not be the last of this kind, FIA needs to think differently than making it a choice between all (manufacturer homologation) or nothing (sod off, VW). Regardless of promises or not about an eventual return to WRC in the future FIA could easily have made an alternative C where a privateer uses a car that is homologated in middle of a season for a maximum of four rallies.

I am not claiming that this is the solution to everything that is illogical in FIA’s competition rules, but it is a symptom of a process that needs to be addressed before the once folksy sport of rallying is enclosed even more.

Since VW’s withdrawal from the WRC in November 2016 there has been countless speculations about the new combination of teams and drivers. So far, Ogier made his way into M-Sport and Latvala to Toyota. Although both these moves were expected the former is as exciting as the latter is discouraging. Three Finnish drivers and a Finnish team boss (of which several has been managed by the same mighty Finn) – no wonder people have began naming it Team Toyota Finland. At the same time these last couple of months have disclosed extraordinary vague communication strategies from the teams and, above all, the promoter.

For instance, what happens with Andreas Mikkelsen and Mads Østberg? As a Norwegian I assumed that, when the VW thing got rolling, wrc.com, the newspapers and motorsport magazines, would feed us with inside information. But not a single word from either of the two has reached the public. Why the secrecy? I understand that teams are busy with testing, setting up contracts, and Christmas in general. PR staff at WRC Promoter GmbH, however, are hired for exactly these reasons. M-Sport, too, made a big song and dance about Ogier’s arrival alongside Tänak. But no mention of Elfyn Evans or Eric Camili, apart from the almost unnoticeable tweet stating that the latter will drive a Fiesta R5 at Rally Monte Carlo – which, under the new three-car rules, creates a seat for either Mikkelsen, Evans, or Østberg. Nasser Al-Attiyah’s vision of entering a private team with the 2017 VW Polo is also a balloon with almost no air left. DMACK, which is mentioned as a new team for Mikkelsen, Evans, and Østberg, at least posted a tweet where they urged fans to stand down as there were some details to sort out before they could present their plans for 2017.

Although keeping fans on the line is part and parcel of sport PR, there is always a risk that it can go too far. Diverting from the mantra in sport management of keeping the lines of communication open can create the impression that teams do not care about the fans. If the teams do not have everything in place, just say so, like DMACK did. Otherwise there are at least two strategies for improving fan engagement towards 2017. The first strategy is to parcel out news on various channels, preferably in a cryptic way. For example, M-Sport could post various images on social media with references to the third driver. To identify him, one would have to do some homework. Maybe there could even be a prize to the fan who first found out who he was. This alternative maintains the social buzz, as well as telling the fans that ‘we hear you’. The other strategy is to announce news in a more official manner. Set a date, deliver the message, and make sure the fans are prepared for next season.

This is not rocket science, or science at all. It is merely a question of taking fans seriously as a world championship promoter.

Who would have thought that Volkswagen (VW), the stalwart of manufacturer engagement in the WRC since 2013, would withdraw from the championship with a suddenness unparalleled in the history of the championship? Official as it now is, the reasons are less interesting than the ramifications. Sure, VW must prepare for a big fine in the wake of ‘Dieselgate’. Workers face uncertain times. But more important to understand the withdrawal is that the eco-hybrid-twist of its brand image is incommensurable with rallying. I think that is partly the reason why VW won’t let the 2017 Polo on to the stages, as impressive as it might have been, in the hands of a privateer team. Then again, VW will make a R5 version of the Polo and engage with other motorsport series, so the eco argument is quite thin.

The one that got away?

A small comfort is that this is not the FIA’s, the WRC’s, or the promoter’s fault. It is car industry politics, similarly as to when Subaru developed the 2008 WRC car just to pull the plug on the programme some months later as an effect of the downfall in the global economy. What is more, it seems like several senior figures at VW did not know about the outcome of the debate, which surely has been taking place in the boardrooms of 2016. However, an estimate of $14.7 billion in costs for cheating with emissions is mentioned as VW’s the upcoming years, in which slashing the £50 million WRC programme, won’t save the day. But the more I look at it, the more it seems like this has been a Terminator business strategy from the inner circle of top VW heads: Cut wherever necessary.

If we forget about money for a minute, the really pressing question is what will happen with the VW drivers for next season. Wild speculations are all over the Internet. On the Norwegian evening news yesterday Andreas Mikkelsen had not even been informed that his employer would quit its business for next year. With most of the seats already taken for 2017 this situation is a mixture of headache and manna from heaven for the remaining teams. Ogier, 4 time world champion, is suddenly available. But the team that would benefit the most from his arrival, M-Sport, does probably not have the money to acquire his services. Toyota is dismissed by many as it is unlikely that Ogier will take on the 2017 season in a test car. His somewhat tense relationship with Citroen does cloud that option, although money talks and bullshit walks here as well. Hyundai? They already have 3 contracted drivers and one extra in Abbring.

Wherever Ogier ends up, this shocking news means an intense process of dealing and wheeling behind the scenes towards Rally Australia. Latvala probably ends up at Toyota, whereas Mikkelsen’s future is tainted with uncertainty. Although he enjoyed a close relationship with M-Sport early in his career, he does not have the funds like Østberg to buy himself a seat. And with Camili contracted for next year, and Tänak on his way back into the works Fiesta, the only obvious option left is D-MACK. There is also an additional dimension to Mikkelsen’s role in all of this. Currently third in the championship he has announced that it is all or nothing at Rally Australia in the attempt to steal the runner-up spot from Neuville. It will be highly interesting to see whether this is has ignited or watered out his motivation.

Just when I thought it could not be better than at Rally Poland, the Finnish Grand Prix on gravel blew me away. What a rally! For the first time in a very long while it is difficult to be analytical about these things. The speed, the incredible battle for third, and the maximum attack from start to finish – these are the ingredients that separate the WRC from any other motorsport. It can’t be explained, it has to be experienced. And as always, Tor-Andre Børresen – the amateur photographer who make the WRC media producer look like a mediocre advertising company – has produced a fabulous collection of action shots.

Naturally, the usual what if-discussions were there. The running order, for instance, was a topic that affected others than Ogier this time. Although Mikkelsen made some mistakes that saw him drop out of podium contention, it was clear that he struggled with the loose gravel as first on the road. Simultaneously, did not Meeke benefit more from his starting position than his performance would tell alone? You know what. It does not matter. These are the rules. Whether they stay the same in 2017 or not does not erase the fact that so far we have six different winners in eight rallies.

If the promoter is able to exploit this rise in competition, I think it could be pivotal to enhance the championship to a broader segment of fans. By talking to a lot of marginally interested WRC spectators lately it seems like two things are needed to change media-wise if this is going to happen. First, the relationship between winning one event and the entire championship must be communicated clearly. Unless you’re an expert, it is difficult to understand the rules or get to know the cars just by looking at the images. Second, the relationship between various events must be utilised as a comparative advantage in a different fashion than has been done up until now. In my view, the shots of Finnish lakes are technically great, but they don’t convey the unique nature of the roads and the insane speeds of Ouninpohja. Like in Børresen’s video above.

The Polish WRC event just edged closer to being on my top 5 list of rallies. Why?

First, the insane fight between Tänak, Mikkelsen, and Paddon. I can’t remember having seen such level of pushing in quite a few years. The competition was intense from start to finish. Applause to Paddon for keeping third when it is easy to either relax too much and go off the road. Glory to Tänak for making out of the Fiesta than what should be possible. Kudos to Mikkelsen for bringing it home despite some scary moments, and unlike the dimwit at wrc.com that wrote he was ‘gifted victory’, I think it was well deserved. A rally is not over until it’s over (by that logic Ogier’s victory in Sweden 2015 would have been a gift, too). And those who think that Mikkelsen cruised into victory should take a look at the video below. If you find cruise mode anywhere, please let me know.

Second, the rally will go into history because of the sportsmanship first and foremost Ogier, but also the others, showed when a heartbroken Tänak crossed the finish line. In contrast to the ‘selfish bastards’ in Formula 1, as Martin Brundle once called them, the WRC guys know each other so well that they know when to pat each other’s back and when to argue. This emphatic spirit is not often seen in professional sports anymore, but when it is, it is beautiful to watch.

Moments like these are more than just nice gestures. They embody values that many sportsmen seemingly have forgotten. For that reason this video above revitalise my belief in the sport as such, reignite the idea that it is the competitive aspect that motivates the drivers, not the money, fame, or number of Instagram followers. It makes people recognise heroic attempts like Tänak’s and, in the case of the current crop of WRC drivers, display it like true sportsmen.

Forget the running order argument. Forget the war of words between Ogier and Paddon. The WRC’s real problem is the lack of competitive diversity and FIA’s half-hearted attempt to level the playing field.

By using running order as a way to hamper Ogier on gravel events and give him benefits on tarmac events, I think they have misunderstood the basis of the issue. The problem is not that Ogier is fast, but that the regulations allow manufacturers with carte blanche checks to develop cars which in VW’s case is tailor-made to a talented driver. This favours manufactures, not the sport, regardless of running order combinations. Not that it is surprising. Manufacturers spend a lot of money on something that may have the least quantifiable ROI of all brand-awareness measures.

Yet the championship could benefit from a stronger emphasis on levelling the playing field in a different way. Ari Vatanen, 1981 world champion and losing candidate to the 2013 FIA presidential election, once proposed a NASCAR solution to avoid the boredom of one driver/one team taking all the wins. I think that is too extreme, as is his support to the shoot-out idea on the last stage, but I can understand his thinking. One way to encourage competitive diversity is to standardise the cars even more. Then it is not merely about developing shock absorbers of Byzantine complexity or differentials worthy a Nobel prize, but a question of how drivers can get more creative in their hunt for more speed.

For instance, the 2017 regulations could have kept the power increase and aerodynamic changes, but added an obligation that all teams had to use a chassis with many similar parts. Then cars would look and sound awesome, simultaneously as costs had been lower and drivers more important than ever. If really successful, it had even allowed for privateers to make a stir on their specialist event, like Gilles Panizzi at the 1999 Rallye Monte-Carlo in a Subaru Impreza. Such a twist is of course no guarantee for competitive diversity, but it surely make surprises more likely. And one surprise is better than none at all.

Volkswagen WRC team boss Jost Capito is at it again: he still hasn’t let go of making the final stage of the rally a shoot out as a solution to the championship’s promotional issues. As I have commented several times, the implementation of this idea would make a mockery of the sport altogether. It may be end up as a commercial improvement, but it is no longer rallying. A more profound issue than a difference of opinion, it seems, is that the FIA must understand that using promotional tools to repair the sport is like doing heart surgery with a band-aid kit.

One of the driver heroes

Instead we should learn from the operation Apple, as explained by professor Richard Rumelt in Good Strategy/Bad Strategy, in rediscovering the true value of the WRC. By September 1997, Apple was on the verge of bankruptcy. Steve Jobs, who had cofounded the company in 1976, agreed to return as interim CEO. In the heyday of dot.com ventures and visionary electronics operations Jobs did his thing: he shrunk Apple to a scale and scope suitable to the reality of its being a niche producer in the highly competitive personal computer business. Although this is Business 101 to many it was quite unexpected, Rumelt writes:

The power of Jobs’s strategy came from directly tackling the fundamental problem with a focused and coordinated set of actions. He did not announce ambitious revenue or profit goals; he did not indulge in messianic visions of the future. And he did not just cut in a blind ax-wielding frenzy – he redesigned the whole business logic around a simplified product line sold through a limited set of outlets (p.13).

Similar to the case of Apple I think the WRC needs to be cut back to a core that can be sustainable for long enough to attract both manufacturers and privateers, fans and investors. This core cannot be defined by promotional interests only. And since there is no Steve Jobs of rallying around, FIA should instead initiate stakeholder research that identify conflicting and harmonious views on the championship. With the new rules coming into effect in 2017, and the terrific point of departure of having four of the five largest car manufacturers in the world as competing teams, Jean Todt, Jarmo Mahonen, Michele Mouton and the others have time to ‘do an Apple’ by using the research findings to rebuild the WRC.

As a start on this research mission, I would suggest four themes. The first theme is cars. Why is it that even though today’s WRC machinery is faster than ever, they are rarely found on people’ top 10 lists of most awesome cars? Because speed is not everything. Impact on the senses are far more important. The second theme is drivers. Today’s pilots are good guys and popular sponsor objects, but are found way down on people’s lists of driver heroes. Why? The third is what I call spectator experience management. Some events do well, others do poor, but overall WRC rallies struggle to find their place in the increasingly dense field of action events. What to do? The fourth is the media production of WRC. Why is it so difficult to convey the drama in a form that stay true to its roots?

Broader insight in these issues, which by no means are exhaustive, would provide a solid platform for making decisions after 2017. The question is whether FIA dares to challenge a promotional regime that has established itself as the developmental force of the WRC.

Yesterday, we got the news from wrc.com that FIA World Rally Championship partner with CFI Markets as official Forex trading partner. No additional information is given about what this means in financial terms, for instance where the investments come from, but the relationship sure is something to be curious about. We all remember what happened the last time the WRC got involved in the darker labyrinths of global capitalism – the Antonov affair, say no more. Qualified prejudices aside, it is still difficult to see the intention behind this partnership.

Forex stands for Foreign Exchange markets, a private market for the trading of currencies. It is speculative by nature and mainly operated by banks. In some aspects it is perfectly reasonable that these services exist, for instance facilitating currency conversion in international trade. In other aspects, like with hedge funds, it is more of a Las Vegas-like club of gambling with other people’s money. In March last year the Bank of England got into a public dispute with an investigation led by Lord Grabiner that claimed the bank should have been aware of the warning signals that Forex was being manipulated. According to Financial Times six banks have paid $4.3bn to authorities in the US, UK and Switzerland so far to settle allegations that their traders attempted to rig the system.

From the CFI Markets website

Against this backdrop there would be nice to get some explanations of why this new WRC deal happened in the first place. What are the motives? What are the aims? If the promoter is short on cash the collaboration with CFI Markets become reasonable as Forex is less complex than other investment opportunities. You hire a company to gamble with your money. According to the aptly named book Rallied! The Alternative Guide to Becoming a Trader by Vladimir Petropoljac, the major reason is leverage. Your options for playing the game are far more diverse than in for instance the stock market. At CFI Markets the minimum amount to open an account is $100.

Consequently, despite the legal issues mentioned above, I can see why WRC Promoter GmbH see this is a business opportunity. But what is in it for the WRC? After all, it is the championship brand which is at stake here. Do teams chip in on this deal? Given that the investments pay off it would be very interesting to know what the promoter have in mind when it comes to distributing the money. Although this partnership does not evoke the largest cries in the WRC community it still generate a lot of questions that at least stakeholders should be given an answer to.